High-grade primary quiets; deal pace to ease; Western Midstream, Energy Transfer firm

By Cristal Cody

Tupelo, Miss., Jan. 10 – The high-grade bond primary market stayed quiet on Friday, capping off a week of heavy corporate volume of more than $60 billion.

Investment-grade issuers have priced about half of the $115 billion to $125 billion of volume forecast for the month.

Looking forward, supply is expected to lighten in the week ahead to about $30 billion to $35 billion, according to syndicate sources.

Bank and financial supply is anticipated in the upcoming week following the release of fourth-quarter earnings reports. Citigroup Inc., Morgan Stanley and other banks are scheduled to post quarterly results next week.

A number of other corporate issuers also are marketing potential bond deals, sources report.

Meanwhile, inflows reached record levels for high-grade funds and ETFs in the past week ended Wednesday.

Lipper US Fund Flows reported on Thursday that corporate investment-grade fund inflows totaled $8.19 billion after outflows of $573 million in the prior week. The inflow is the largest investment-grade inflow on record, a source said.

Inflows to U.S. high-grade funds and ETFs also reached a record $8.82 billion inflow for the past week ended Wednesday, above the previous record inflow of $6.94 billion set in September 2019, according to a BofA Securities, Inc. global research note released Friday.

The January inflow is the highest on record, excluding two weeks that were distorted by Pimco outflows in October 2014, credit strategist Yuri Seliger said in the note.

Short-term high-grade inflows totaled $3.32 billion after a $200 million outflow in the prior week, while excluding-short-term inflows rose to $5.59 billion from $2.77 billion in the week-ago period.

Inflows to investment-grade funds also rose to $5.96 billion this past week from $690 million, and ETF inflows climbed to $2.96 billion from $1.89 billion a week earlier, Seliger said.

In the overall fixed income space, a $13.58 billion inflow for the past week was the third largest since at least 2009, according to the report.

Looking at the secondary market, new investment-grade notes priced this week were mostly wrapped around issuance to tighter, sources said.

Western Midstream Operating, LP’s $3.5 billion of senior notes (Ba1/BBB-/BBB-) that priced in four tranches on Thursday improved about 3 basis points to 8 bps across the fixed- and floating-rate tranches.

Nomura Holdings Inc.’s $3 billion two-part offering of fixed-rate senior notes (Baa1/BBB+) that priced in the previous session tightened about 6 bps to 5 bps on the bid side.

Energy Transfer Operating LP’s $4 billion of senior notes (Baa3/BBB-/BBB-) that were sold in three tranches on Tuesday traded about 14 bps to 19 bps tighter than issuance.

Bank and financial paper was mixed but traded about 2 bps to 5 bps tighter on the day, a source said.

Bonds in the energy space also were mixed and traded mostly flat to softer on Friday.

Occidental Petroleum Corp.’s 3.5% senior notes due Aug. 15, 2029 (Baa3/A) that priced as part of a $13 billion 10-tranche offering in August eased about 2 bps to 141 bps bid, according to a market source.

The Los Angeles oil and gas, chemical and midstream company sold $1.5 billion of the notes on Aug. 1 at a Treasuries plus 185 bps spread.

The Markit CDX North American Investment Grade 33 index softened modestly on the day to a spread of 44.2 bps.

Western Midstream firms

Western Midstream Operating’s 4.05% notes due Feb. 1, 2030 were quoted on Friday at 212 bps bid, 208 bps offered in secondary trading, a market source said.

The notes priced in a $1.2 billion tranche on Thursday at a spread of 220 bps over Treasuries.

Initial guidance was in the 250 bps to 262.5 bps area.

The Woodlands, Tex.-based company owns, develops and operates midstream energy assets.

Nomura improves

Nomura Holdings’ tranche of 3.103% notes due Jan. 16, 2030 firmed in the secondary market to 120 bps bid, 117 bps offered, a source said on Friday.

Nomura sold $1.5 billion of the 10-year notes on Thursday at par to yield a spread of 125 bps over Treasuries.

Revised initial price talk was in the Treasuries plus 140 bps area, 5 bps tighter than initial guidance.

The financial holding company is based in Tokyo.

Energy Transfer tightens

Energy Transfer Operating’s 3.75% notes due May 15, 2030 are trading better than issuance at 256 bps bid, 252 bps offered, a source said Friday.

The company sold $1.5 billion of the long 10-year notes on Tuesday at a Treasuries plus 255 bps spread, compared to initial guidance in the 212.5 bps over Treasuries area.

Energy Transfer is a natural gas midstream and intrastate transportation and storage company based in Dallas.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.